If a check is payable to a certain person, it’s understood that it must be deposited into that person’s bank account. But what if that same check is given to you as a payment? Can you deposit someone else’s check-in in your account?
You can deposit someone else’s check in your account, but not all banks allow it. There are U.S. banks that accept this as long as the check is properly endorsed to you by the payee. At the back of the check, the payee must write “Pay to the order of [Your Name]” and sign under it.
It’s best to call your bank first to confirm if depositing someone else’s check in your account is not against their policy.
Read on to learn more about depositing someone else’s check in your account and how to do so.
Can You Deposit Someone Else’s Check in Your Account?
Generally, a check payable to a certain person can’t be deposited in another person’s account. But there are U.S. banks that allow it as long as the check is properly endorsed to you. At the back of the check, the person who rightfully owns it must write “Pay to the order of [Your Name]” and sign under it.
However, there are banks with policies that don’t allow this. That’s why it’s always best to confirm it first with your bank.
How Can You Deposit a Check Made out to Someone Else?
So, how can you deposit someone else’s check in your bank account?
1. Contact Your Bank
First things first. The very first step is to contact your bank to confirm if they allow this. In most cases, this is not acceptable in banks because it comes with a higher risk of fraud. However, there are times when banks allow it, but you and the payee will undergo a thorough validation process.
For example, both you and the payee are clients of the bank where you’ll have the check deposited. In which case, it would be easy for the bank to contact both of you for validation. Then, the bank may accept the third-party check.
2. Payee Has to Endorse the Check Properly
However, there’s still more to the process of depositing a third-party check in your account. The payee has to endorse it properly and has to write several details at the back of it.
The payee must write “Pay to the order of [Your Name]” and sign under it. Other times, banks require more details, including the address and the contact number.
Even if you’ve been a client of the bank for a long time, you might be required to write details at the back of the check too. Some banks will require you to sign and write your contact details too.
This means that you can’t simply hand over the check to the bank teller and ask to deposit it in your account. Even if you have confirmed that the bank will accept the check, the payee still has to endorse it properly.
3. Present a Copy of Your Valid Identification Cards
You and the payee also have to present a copy of your valid identification cards. So, it’s best to ask your bank for all the requirements you need to prepare beforehand. The last thing you’d want to happen is to exert an effort to visit your bank, only to find out that you lack requirements.
Can You Deposit Someone Else’s Check Through an ATM?
For sure, you’re wondering, can you deposit someone else’s check in your account ATM? While it could be possible with some machines, it’s not hassle-free. It’s still best to deposit a third-party check over the counter.
Using an ATM for most bank transactions is convenient. But not if you’re depositing a third-party check because it needs a significant level of human intervention.
The validation process is more thorough, wherein there might still be a need for the bank to contact the payee. Aside from that, there might be additional requirements that you need to submit to the bank. The ATM can’t handle all these processes. That’s why you can only deposit a third-party check over the counter.
What Is a Third-Party Check?
A third-party check looks like any regular check. It’s just that it involves three parties, namely:
- Payee, and
- The person the check is endorsed to.
In other words, the payor issues a check to another person, also known as the payee. For the sake of this example, let’s assume that the payee owes you money. Instead of issuing a check payment, the payee decides to hand you that same check issued by the payor.
If the check is properly endorsed and approved by the bank, the check becomes yours legally. You can now either cash it or deposit it.
Basically, that’s what a third-party check is.
Risk of Fraud When Depositing Someone Else’s Check
Back when the fraud was still not an issue, depositing third-party checks was widely accepted by banks. There were certain processes to follow, and bank policies were also strict. But the evolution of high technology has led to alarming cases of fraud.
This prompted banks to implement stricter policies. Now, depositing third-party checks is generally not allowed. There are, however, transactions that get approved, but this is on a case-to-case basis. A thorough validation process is conducted before the bank gives its signal.
Banks are highly concerned about forgery, identity theft, the risk of losing funds, and other forms of fraud. In fact, bank regulators highly discourage this type of transaction now, even if there’s a specific policy in place for depositing third-party checks.
Financial Institutions That Don’t Accept Third Party Checks
While depositing third-party checks is discouraged, some banks and credit unions still accept it on a case-to-case basis. In most cases, this is approved only if the original payee and the third-party payee have existing accounts in the bank. But, of course, both parties will still have to undergo a thorough validation process.
It can also be approved after the bank has talked to the original payee. There are times when the third-party check will be put on hold by the bank. It won’t be processed until such time that they have confirmed the transaction with the original payee.
There are circumstances when the original payee does not have an existing account in the bank where you, as the third-party payee, will deposit the check. In which case, the bank can still approve it. However, don’t expect it to be hassle-free.
Here is a shortlist of several financial institutions that don’t accept third party checks, according to their Customer Service Team:
- Wells Fargo
- Regions Bank
- PenFed Credit Union
- Discover Bank
- Citizens Bank
- Charles Schwab Bank
- Bank of West
- Ally Bank
- Alliant Credit Union
Financial Institutions That Accept Third-Party Checks
Now, let me mention several financial institutions that accept third-party checks. But please note that even if they are known for accepting third-party checks, transactions can still get disapproved.
These financial institutions have strict policies in place. They have the authority to approve or disapprove transactions involving third-party checks. Also, servicing clients for this type of transaction is not free. It does come with a fee:
1. Bank of America, BB&T, Chase Bank, and Citibank
To give you an idea, Bank of America, BB&T, and Chase Bank charge a fee of $8 per transaction for checks amounting to more than $50. At Citibank, the fee depends on the amount of the check. But the service becomes free of charge if the check amounts to more than $5,000.
2. SunTrust Bank
SunTrust Bank charges $7 for every check amounting to more than $25. TD Bank charges $7 per check regardless of the amount. Whereas U.S. Bank only accepts third-party U.S. Bank checks, which have a service fee of $7 per check.
3. PNC Bank
PNC Bank accepts third-party checks too. It charges a service fee of $2 for every check amounting to more than $25. M&T Bank charges $3 per check or 2% of the check amount, whichever is higher. At First National Bank, the service fee amounts to $10 per transaction.
Service fees charged by HSBC vary too. If the third-party check is a business check worth $100 or below, the service fee is $3. If the check is worth more than $100, the service fee becomes $5. When it comes to personal checks, they are free of charge if they are HSBC checks.
5. Connexus Credit Union and Navy Federal Credit Union
Connexus Credit Union and Navy Federal Credit Union also accept third-party checks. They don’t charge any fees.
Please note that service fees are subject to changes. It’s best to contact the Customer Service Team of these financial institutions to confirm the latest fees.
Why Financial Institutions Have the Right Not to Accept Third Party Checks
Third-party verification is not at all easy, and it poses a higher risk of fraud and theft. This is why financial institutions have established stricter rules for approving third-party checks. These rules include the right to refuse to accept them.
If the bank knows you and the original payee, your transaction has a high chance of approval. Otherwise, it might be impossible to get their approval.
Financial institutions apply several strategies to verify third-party checks. It is unfortunate if you fail all their verification approaches.
Please note that financial institutions are cautious in accepting third-party checks not only for their benefit. As their client, they are also protecting you. Many third-party checks are issued to commit different types of criminal offenses. Examples of these include tax evasion, money laundering, and fraud.
Alternatives to Depositing Someone Else’s Check In Your Account
If someone pays you using a third-party check, I recommend you not to deposit it. A better option is to cash it instead.
Here are two ways of doing so:
- Cash the Check in the Bank of the Original Payee
- Have It Cashed in Retail Stores
Cash the Check in the Bank of the Original Payee
Cashing the check in the bank of the original payee is a better alternative than depositing it. It is easier to verify the transaction that way. This is because the original payee maintains an account in that bank.
But then again, there are steps you must follow too. For instance, the original payee still needs to endorse the check properly. The bank teller will require the usual details written on the back of it. These include the original payee’s signature.
Have It Cashed in Retail Stores
Several national stores offer check-cashing services. Similar to financial institutions, there is a service fee per transaction.
But between cashing in a bank and a retail store, I highly recommend the former.
Alternative Payment Methods
If someone owes you money, discourage that person from giving you a third-party check. Instead, recommend more convenient options. These include the following:
- Request to Issue a Check Payable to You
- Receive Payment via Online Transfer
- Ask to Have the Payment Deposited in Your Account
- Request Cash Payment
1. Request to Issue a Check Payable to You
If people owe you money and have check accounts, request them to issue checks payable to you. A checkbook indeed has a cost but, then, it’s only minimal. It’s nothing compared to the inconvenience brought about by a third-party check.
2. Receive Payment via Online Transfer
Not everyone has a checking account, or some are just too lazy to issue one. In which case, tell them that you can accept payments via online transfer. In this day and age, this is the most convenient payment method. They can even complete the transaction in the comfort of their own homes.
3. Ask to Have the Payment Deposited in Your Account
Instead of accepting third-party checks, ask them to deposit the funds in your bank account. Provide them your bank details. That way, you won’t have to experience the inconvenience of transacting.
4. Request Cash Payment
Another convenient way is to accept cash payments instead. This type of transaction requires no service fee and other documents. This brings convenience to both parties.
Conclusion – Can You Deposit Someone Else’s Check in Your Bank Account?
In general, a check payable to a certain person can’t be deposited in another person’s bank account. But there are U.S. banks that allow it as long as the check is properly endorsed to you. At the back of the check, the original payee must write “Pay to the order of [Your Name]” and sign under it.
However, even if banks accept third-party checks, it doesn’t mean that your check will get approved right away. There’s a strict process to follow, and the bank has the right to disapprove of the transaction.
If you encounter inconvenience, consider the fact that the bank is protecting not only their business. But they’re protecting you too. The last thing that they’d want to happen is for you and their business to become victims of fraud.